Radial Truss Industries (Pty) Ltd v Haihambo (HC-MD-CIV-ACT-CON-2017/03932) [2020] NAHCMD 153 (27 May 2020);

Group

Headnote and flynote
Flynote: 

Contract –Breach thereof-Claim for damages-Contract unlawfully terminated by defendant-Plaintiff entitled to damages.

Headnote and Holding: 

The plaintiff sued the defendant for damages in the amount of N$ 70 546.18 for construction work done and services rendered at the house of defendant and for loss of profit in the amount of N$ 117 783,12 as a result of a breach of a Service Level Agreement (the SLA) by the defendant. The parties entered into the SLA whereby plaintiff would renovate the house of the defendant for an amount of N$ 588 915.67. The work had to be completed within 6 months from 16 April 2017 to 18 October 2017.The SLA contained a non-variation clause. In terms of the SLA, it was the responsibility of the defendant to pay the plaintiff. Defendant obtained a loan from first capital housing fund to pay for the renovation. According to the defendant, it was orally agreed between the parties that the plaintiff would be paid by first capital housing fund. The plaintiff denied that. The defendant was unhappy with the progress of the construction and the quality of the work and as a result was instructed by first capital fund to terminate the SLA before the completion date. The plaintiff denies the allegations by the defendant. The plaintiff stated that the period left, when the SLA was terminated, was enough for it to complete the construction within completion date as per the SLA. First capital housing fund evaluated the work done at the date of termination at 15% of the quoted amount and paid N$ 83 920.48 to the plaintiff. The plaintiff evaluated the work done at 26%.The first claim amount is N$ 70 546.18, being the balance for work done .The second claim is 20% of the quotation amount ,being the profit it would had made, had the SLA not been unilaterally and prematurely been terminated by the defendant.

Held that, the parties entered into a SLA which contained a non-variation clause which could not be varied by an oral agreement.

Held further that plaintiff was entitled to claim payment from the defendant for work done at his house as per the SLA.

Held, further, that the defendant unlawfully terminated the SLA and consequently, plaintiff was entitled to be awarded damages flowing from such unlawful termination.

Full judgment

Reportable

REPUBLIC OF NAMIBIA       

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

JUDGMENT

 

Case No: HC-MD-CIV-ACT-CON-2017/03932

In the matter between:

 

RADIAL TRUSS INDUSTRIES (PTY) LTD                                                      PLAINTIFF

 

And

 

JOHANNES HAIHAMBO                                                                                DEFENDANT

 

Neutral citation: Radial Truss Industries (Pty) Ltd v Haihambo (HC-CIV- ACT-CON 2017-03932) [2020] NAHCMD 202 (27 May 2020)

 

CORAM:        NDAUENDAPO

 

Heard:            3 December 2019

Delivered:     27 May 2020

 


ORDER


 

Ad claim 1

1.         Judgment is granted in favour of the plaintiff for the payment of N$ 70 546.18.

Ad claim2.

2.         Judgment is granted in favour of the plaintiff for payment of N$ 117 783.13. Ad both claims

3.         Interest at the rate of 20% per annum from date of judgment to date of payment.

4.         Costs of one instructed counsel.

 


JUDGMENT


 

NDAUENDAPO, J

 

Introduction

[1]        The plaintiff, Radial Truss Industries (Pty) Ltd, a private company with limited liability, duly registered and incorporated in accordance with Namibian company laws, issued summons against the defendant, Mr. Johannes Haihambo.

 

Pleadings

The particulars of claim states:

Ad claim 1

[2]        ‘3. On or about 26 May 2017 the plaintiff and defendant entered into a written Service Level Agreement (marked “A”) (the “SLA’’).

4.         The express material terms, alternatively implied in the further alternative tacit terms of the agreement were as follows:

4.1       Plaintiff shall renovate defendant’s house at erf 374,David Carsten street, Olympia, Windhoek, as set out in annexure “A” to the SLA in the amount of N$588 915.67.

4.2       The duration of the SLA is 6 months commencing from 18 April 2017 and completing by 18 October 2017.

4.3       The plaintiff must generate and render to defendant invoices for services rendered.

4.4.      The defendant shall settle any amounts owing under invoices generated and rendered within the agreed payment terms prescribed in schedule ‘1.

4.5       The SLA may be terminated on mutual consent by both parties on such conditions as the parties may determine.

5.         The plaintiff complied with the terms of the agreement, in that it delivered services in terms of the agreement and provided the defendant with an invoice in the amount of N$154 466.66 being 26% delivery of the total project amount. (Invoice “B”).

6.         The Defendant partially complied with the payment terms in that on 07 September 2017, the defendant paid an amount of N$83 920.48, being a portion of an amount of N$154 466.66 invoiced for services rendered.

7.         The defendant breached the SLA by:

7.1       Terminating the SLA before the expiry of a period of 6 months period and without any reason for such termination in compliance with the provision of the SLA.

7.1       He failed to pay the balance of an amount of N$70 546.18 being the amount due and payable in respect of the aforesaid invoices for services rendered.

8.         As a result, the plaintiff is entitled to payment of an amount of N$70 546.18 for services rendered to defendant in terms of the SLA.’

 

Ad claim 2

[3]        ‘9. In addition , and as a result of unlawful termination of the agreement by the defendant ,the plaintiff suffered damage and/ or loss of profit which flowed naturally and directly from breach of the SLA by defendant in the total amount of N$117 783 being 20% of the project cost.’

[4]        Plea

‘6         The defendant admitted to paragraphs 3 to 4 of the plaintiff’s particulars of claim and raised a special defence of an oral agreement, which is stated as follows:

“4.        In addition to the terms pleaded in paragraphs 3 and 4 of the particulars of claim it was orally agreed between the parties as follows:

4.1       The defendant would secure a home improvement loan in the amount of N$588 915.67 from First Capital Housing Fund.

4.2       The plaintiff would submit invoices for progress payments for work done to First Capital Housing Fund for payment.

4.3       The aforesaid progress payments for work done were to be paid out on a maximum of 3 pay-outs and on minimum of 3% work done or alternatively upon final completion of the property.

4.4       The plaintiff would receive all payments of its invoices to its account from First Capital Housing Fund.”

Ad para graph 5 thereof

Save to admit that Defendant was provided with an invoice for N$ 154 466.66 the rest of the contents are denied.

Ad paragraph 7 thereof

“9 without derogating from the generality of the aforesaid denial the Defendant pleads as follows:

9.1 The agreement was terminated by agreement between the parties in terms of clause 12.3 of the written agreement.

9.2 On 15 August 2017 it was agreed between the parties that the agreement would be terminated and the defendant would authorize progress payment by first capital housing fund for the 15% progress work done.

9.3The plaintiff was paid N$ 83 920.48 as progress payment for work done and as parts of settlement on termination of the agreement.

9.4 Alternatively, and only in the event of the honorable court not finding for the defendant in the above respects , it is pleaded that the defendant was entitled to terminate the agreement on account of breach of the agreement by the plaintiff ‘

10. The plaintiff breached the agreement between the parties in some or all of the following ways:

10.1 Whereas the construction work was agreed to commence by 18 April 2017, the plaintiff only commenced construction during June 2017

10.2 By August 2017 majority of the works on the house were still outstanding as per the progress report.

10.3 The plaintiff and its employees frequently abandoned the site and stopped construction and renovation works without reason or explanation.’

 

Issues

There are three issues for determination:

[5]        (a) whether the parties entered into an oral agreement that varied the payment terms of the SLA (b) whether the defendant unlawfully terminated the SLA on 15 August 2017 contrary to clause 3.2 of the SLA (c) if, established, that the defendant terminated the SLA unlawfully, whether the plaintiff is entitled to damages?

 

Defendant’s case

[6]        At the start of the case, I gave a ruling on an application by the plaintiff that the duty to begin lies with the defendant. Accordingly, the defendant began to lead evidence. Mr. Haihambo testified that he and his wife decided to renovate their house situated at erf 374 Ester Carsten Street, Olympia. They obtained a quotation from the plaintiff in the amount of N$ 588,915.96. They applied to first capital housing fund for financing. On 12 April 2017 their application was approved and the plaintiff was appointed as the contractor. It was the responsibility of the plaintiff to ensure that its material credit account, if any was paid upon receipt of progress payment from first capital housing fund. He testified that the obligation to pay out for any progress work done in part or in full was the responsibility of first capital housing fund and did not rest with them. On 26 May 2017 a Service level Agreement (the SLA) was entered between him and the plaintiff. He testified that the basis of the SLA was for additional work that was to be done at erf 374.In terms of the SLA the duration of the agreement was for a period of six months starting from 18 April until 18 October 2017.He testified that a kick-off meeting was held with Messrs. Kweenda and Witbooi, the administrator of the project. At that meeting, the strategy of the project was explained. He testified that on 8 June 2017 Mr. Nelson, an architect of the plaintiff informed him that they were on their way to the house to start with the project. He testified that they were surprised that the work was not started after the excavation was done and it was on standstill for two to three weeks. That caused great inconvenience to them and they had to move out of the house. As a result of the contractor’s inability to continue with the work, he had to call an inspector from the City of Windhoek to come and inspect the work. He testified that even after the inspection, the plaintiff only constructed a bathroom, the main bedroom suite with a bathroom and an unfinished dressing room. In addition a lapa foundation which was not on the quotation and columns were constructed. Due to poor workmanship and lack of supervision the project experienced many delays caused by the plaintiff’s employees. From 8 June to 24 July 2017, the work came to a standstill and the workers abandoned the site. On 3 August 2017 he contacted Mr. Kweenda and expressed his dissatisfaction with the slow progress of the project. Mr. Kweenda informed him that the plaintiff was experiencing financial problems and requested him to go to first capital housing fund to go and signed for first progress payment. First Capital decided to send a valuator to go and evaluate the work done on the project.

[7]        The valuation was done and on 9 August 2017 a valuation report was compiled and forwarded to the plaintiff. In terms of the report, only 15% of the work was done on the site. The plaintiff was unhappy with the valuation report. A meeting was arranged with first housing capital, and attended by himself, Witbooi and a staff member from first capital housing. At that meeting, plaintiff was informed to appoint their own valuator to go and assess the work done on the site. The plaintiff failed to comply with that instruction and they were requested to remove their materials from the site. On 15 August 2017 first capital housing fund requested him to draft a termination letter and in terms of the termination letter, first capital housing fund was only going to pay 15% of the amount of the quotation as per the valuation report. During September 2017 an amount of N$ 83,920.48 was paid to the plaintiff by first capital housing fund.

[8]        He further testified that the plaintiff breached clause 1.1.3 of the SLA which states that work had to commence on 18 April 2017, but the plaintiff only commenced construction during June 2017 and by August 2017 the majority of the work was still not completed. The work was of poor workmanship and the employees of the plaintiff frequently abandoned the site.

 

Plaintiff’s case

[9]        Mr. Risto Kweenda testified that he was employed as the operations manager of the plaintiff. He was responsible for ensuring that all operations were properly managed. On 31 May 2017 a kick-off meeting was held with the defendant and he informed the defendant that he will be managing the construction project at defendant’s house. He testified that after the kick-off meeting, there was a two week delay in commencing with the construction because the building plan had not yet been approved by the City of Windhoek. He testified that the building materials had been ordered and delivered since 18 April 2017, but could not start with the construction because of the issue of the building plan. Upon approval of the building plan, they did the trenching and the inspector from the City of Windhoek inspected and approved it. They then build the foundation from the ground up to DPC level after which the inspector inspected it and approved it. Thereafter they started with the   brick work up until roof level. The brick work included a new additional main bedroom with a bath; a toilet; a dressing room; an extension of the existing bedroom and construction of the lapa including plumbing work. On or about 15 August 2017 he was informed by Mr. Witbooi that the defendant had cancelled the SLA and they removed all their tools and machinery from the site. He testified that the remaining work at the house could have been completed within the completion date as per the SLA, had the SLA not had been terminated on 15 August 2017.

[10]      Mr. Lameck Kweendo, a director of the plaintiff, corroborated the evidence of Risto Kweenda in material respects. He further testified that the defendant unilaterally terminated the SLA. He further testified that the plaintiff was entitled to 20%of the total project costs as profit that would have been realized had the SLA not been cancelled prematurely by the defendant. The total project costs was N$ 588 915.67 and 20% thereof would be N$ 117 783 and that is the profit margin they put on their contract when they tender for projects.

[11]      Mr. Witbooi testified that he was employed as an estimator by the plaintiff and he prepared the quotation for the renovation to the defendant’s house. He testified that on or about November 2015 the defendant approached their offices and presented them with a preliminary building plan of his house. The defendant wanted additions which included: a main bedroom with its own toilet; a dressing room as well as alterations to the main house; renovations to the kitchen and the installation of built in cupboards and flats to be constructed in the yard and a Lapa. He prepared the quotation for the defendant to submit to first capital housing fund. The defendant informed him to remove the flat from the quotation. And he complied. The final quotation was given to the defendant and he submitted it to first housing capital fund. He was later informed by Mr. Kweenda that the quotation was approved. On 31 May 2017 a kick–off meeting took place and attended by himself, the defendant, his wife and Risto Kweenda. At that meeting, he explained to the defendant how the process of construction would be conducted, the works to be done, the total costs of construction and the channel of communication. They agreed on the starting and completion date, being the 18 April 2017 and to be completed by 18 October 2017 as per the SLA. They later found out that the building plan was not submitted to the City of Windhoek for approval and that delayed the starting of the project. When approval was eventually granted, they started with the setting out the trenching. He ordered sand, stone cement and bricks. Which were delivered at the site. After approval for trenching was obtained from the City of Windhoek, they started with the building works, which included the construction of the main bedroom, the dressing room, the bathroom, the extension of the second bedroom and the lapa. On 1 September 2017 a tax invoice in the amount of N$ 154 466.66, being 26% of the quotation amount of the total project amount of N$ 588915.67, was sent to the defendant for progress payment  for work done (“B”).

[12]      He further testified that first housing capital fund evaluated the work done and concluded that the work done was only 15% of the quotation amount and that they would only pay out an amount of N$ 83 920 .48 to the plaintiff. He approached first capital to inquire why the valuation was 15% and not 26% of the work done. He was not given a chance to explain how he arrived at 26% of the work done. The defendant was instructed by first housing capital to cancel the contract and they were ordered to remove their machineries and tools from the site.

 

Submissions by defendant

[13]      Counsel argued that the defendant was awarded a home loan by first capital housing fund and the contract to renovate the house was awarded to the plaintiff and the letter of confirmation dated 12 April 2017 (Ext “B”) was also communicated to the plaintiff. Counsel argued that from the wording of the letter the obligation to pay out for any progress work done rested squarely on first capital housing fund and not on the defendant. Counsel argued that the acceptance of the terms of award by the plaintiff constituted an agreement between the plaintiff and first capital housing capital fund in as far as it relates to the progress payments for work done. Counsel further relied on the case of Namibia Broadcasting Corporation v Kruger and Others, [1] where the court said: ‘The person to whom the offer is made can only convert it into a contract by accepting, as they stand, the terms offered, he cannot vary them by omitting or altering any of the terms or by adding proposal of his own’. Counsel argued that as far as exceptions to the parole evidence were discussed in the matter of Damaraland Builders CC v Ugab Terrace Lodge CC,[2]  where the court said:

‘There are some exceptions to the parole evidence rule, namely whether or not there was a contract, supplementary and subsequent oral contracts, and to explain the terms used in the contract….As an exception to the parole evidence rule a party is entitled to show by evidence that apart from the written contract there have been an independent oral contract. It is permissible to provide evidence of the subsequent oral agreement which alters the terms of the written contract.’

[14]      He argued that in light thereof, the parole evidence rule does not find application in this matter and that there was indeed prior oral agreement between the plaintiff and first capital housing fund as far as it pertains to the mode of payment and the plaintiff should have sought recourse against first capital housing fund. That submission is clearly at variance with the defendant’s own evidence when he testified during cross examination that there was no oral agreement pertaining to the mode of payment.

[15]      Counsel further argued that the defendant unilaterally terminated the agreement and that he was well within his rights on account of the pleaded breaches committed by the plaintiff. Counsel relied on the case of Bekazaka Properties (PTY) ltd v Pam Golding Properties[3] (Pty) Ltd where the court said:

‘When one party to a contract commits a breach of material term, the other party is faced with an election. He may cancel the contract or he may insist upon due performance by the party in breach. The remedies available to the innocent party are inconsistent. The choice of one necessarily excludes the other, or it is said, he cannot both approbate and reprobate. Once he has elected to pursue one remedy, he is bound by his election and cannot resile from it without the consent of the other party’.

On the quantum of the claim amounts, counsel argued that no expert witness statements and expert reports were filed to explain how the amounts were arrived at. According to counsel, Mr. Witbooi who testified on behalf of the plaintiff is neither an actuary nor a qualified quantity surveyor and therefore not an expert.

 

Submissions by plaintiff

[16]      Counsel argued that the SLA contained a non-variation clause. Relying on the authority of Von Weidts v Goussard,[4] counsel argued that the contract could not have been varied by the confirmation letter. She argued that the parol evidence rule applies in this case and as such the SLA in clause 5.3 which places the obligation on the defendant to effect payments for services rendered by the plaintiff was and could not have been varied by the defendant’s confirmation letter obtained from its financier, first capital housing capital. Defendant also conceded that there was no oral agreement with the plaintiff. Counsel further argued that the caveat subscriptor rule finds application in this case. Counsel argued that contractual obligations must be honored when the parties have entered into the contractual agreement freely and voluntarily.

[17]      Counsel argued that construction work only started 2 to 3 weeks after the kick-off meeting(31 May 2017) due to the fact that the building plan as was approved by the City of Windhoek did not correspond with the measurements on the ground. The plaintiff also had to wait for the defendant’s architect to come from South Africa to rectify the problems with the building plan. The delay was reasonably explained and it was not material enough to warrant the defendant to cancel the SLA. Counsel argued that the work that remained by the time the SLA was cancelled in August 2017, could have been completed within two months and thus within the contract period and therefore the defendant prematurely and unilaterally cancelled the contract.

[18]      Counsel further argued that Mr. Kweenda testified that the plaintiff was entitled to 20% of the total project cost as profit that would have been realized had the SLA not been cancelled prematurely by the defendant. The project cots was N$ 588915.67 and 20% of that amount would be N$ 117 783.

 

The applicable legal principles

[19]      In terms of the Service Level Agreement (the SLA) the parties agreed to a non-variation clause. It states:

‘12.4    Exhaustive record and variation: This agreement constitutes the exhaustive record of the agreement between the parties on this subject matter thereof. Any variation thereof shall require the written form, signed by the parties.’

In Lowrey v Steelman[5], the court said the following about non variation clause:

 ‘The rule is that when a contract has once been reduced to writing no evidence may be given of its terms except the document itself, nor may the contents of such document be contradicted, altered, added to or varied by oral evidence’.

[20]      In National Board (Pretoria) Pty Ltd and Another[6] v Estate Swanepoel the court said:

‘When a juridical act is embodied in a single memorial, all other utterances of the parties on that topic are legally immaterial for purpose of determining what the terms of their act are.’

In law, the principle caveat subscriptor, applies, meaning, let the signer be aware. In Hugo v Council of the Municipality of Grootfontein (2015(1) NR 739(SC) para 16. The SC held:’ it is a trite principle of the law of contract that a person who signed a contractual document thereby signifies his assent to the contents of the document.

Marirtz JA in Namibia Broadcasting Corporation v Kruger and Others (2009(1) NR 196 SC paras 9—10 stated the following:”… [9] Fagan CJ remarked in George V Fairmead (Pty)Ltd ‘When a man is asked to put his signature to a document he cannot fail to realize that he is called upon to signify, by doing so, his assent to whatever words appear above his signature.”

 

The law to the facts

[21]      The defendant pleaded that the parties entered into an oral agreement in terms of which the defendant would apply for financing for the renovations of the house from first housing capital fund and that plaintiff would submit invoices to first housing capital fund for payment. The defendant also testified that the plaintiff was aware that first capital housing fund will pay for the renovation of the house. The letter (dated 12 April 2017) annexure “MMM” from first capital in which the plaintiff was appointed as the contractor was also communicated to the plaintiff. That evidence was not disputed. In that letter it is stated:

‘Kindly Note: It is the responsibility of the customer/Contactor to ensure that their materials credit accounts if any) are paid upon receiving a progress payment from our office (which is paid-out in three (3) withdrawals or pay-outs maximum) on a minimum of 30% progress work done or alternatively upon final completion of property. Clause 5.3 of the SLA deals with payment. It provides: 5.3 Client shall settle any amounts owing under invoices render in accordance with clause 4.2 within the agreed payment terms as per Schedule a Payment shall be effected with reference to the Client’s reference number or code under which each matter is dealt with and to which the invoice in each case relates and in accordance with such other payment arrangements or mechanism as the Representatives may from time to time determine.’ (My emphasis)

[22]      Did the payment arrangement as contained in the letter from First Capital Housing Fund to the defendant in which the plaintiff was appointed as the contractor, amount to a variation or alteration of clause 5.2 of the SLA? The answer is ’no’ because clause 5.2 allows the parties to the SLA to make other payment arrangements for payment of invoices and that other arrangement includes first capital making payments on behalf of the defendant because of the loan it had advanced to the defendant and such arrangement was not necessary to be reduced to writing and signed by both parties as it was provided for in clause 5.2 of the SLA. That kind of arrangement is common in the construction industry. But despite that payment arrangement, is the defendant precluded from suing the defendant for the renovation done to the house of the defendant?

[23]      In terms of clause 5.3 of the SLA’ the client (defendant) shall settle any amounts owing under invoices rendered in accordance with clause 4.2 within the agreed payment terms as per Schedule A.’ In terms of clause 5.3 the defendant shall settle any amounts owing under the invoice ,accordingly  the plaintiff was entitled to seek payment from the defendant. Mr. Witbooi testified that the only invoice which the plaintiff issued under SLA was submitted to the defendant by beginning August 2017.

 

[24]      Did the defendant unilaterally and prematurely terminate the SLA?

Breach and events of default are provided for in clause 7 of the SLA, It states: ‘7.1 in the events of the client committing an event of default, Radial shall be entitled to terminate this agreement, without prejudice to any other rights it may have in terms of this agreement or law.’ (My emphasis) It appears from clause 7.1 that only the plaintiff was entitled to terminate the contract in the event of any default. The SLA was drafted by the plaintiff and no wonder that it was drafted to protect its interest. Clause 12.3 provides for termination of the agreement. It states: ‘Notwithstanding the provision of clause 3.2 and save for circumstance of breach as set out hereinbefore, this Agreement may be terminated at any time by mutual consent of the parties on such conditions as the parties may determine and subject to clause 12.4 below.’(My emphasis)

[25]      The defendant testified that the agreement was terminated because the plaintiff failed to comply with the agreement in that; it did not start with the project on 18 April 2017; failed to get all the materials needed for the project on site; it employed unskilled workers and as a result the workmanship was of poor quality and at one point during June to 24 July 2017 its workers abandoned the site. The defendant further testified that he spoke to first capital housing fund about the state of affairs of the project and first capital housing fund sent an evaluator to go and valuate the work done and evaluated the work done at 15% of the quotation amount. He further testified that first capital advised him to draft a termination letter of the SLA. Such letter was drafted on 15 August 2017 but the plaintiff refused to sign the letter.

[26]      Mr. Witbooi, the estimator of the plaintiff, testified that the reason why the construction could not start on time was because there was a problem with the building plan which was provided to the plaintiff by the architect of the defendant. The problem was that the measurements on the plan differed with the measurements on the ground (site).The architect of the defendant was in South Africa and he was not available to sort out the problem. That evidence was uncontested. Because of the aforesaid problems, the work only started 2 to 3 weeks after the kick-off meeting which was held on 31 May 2017. He testified that the invoice amount which was sent to the defendant was 26% percent of the work done.

[27]      Counsel for the defendant argued that Mr. Witbooi is not an expert and the court must not rely on his evidence regarding the 26 per cent of the work done at the house. I disagree .Mr. Witbooi is an estimator with many years of experience and he is the one who prepared the quotation that was accepted by the defendant and therefore his evidence is reliable. He arrived at that figure of 26% by comparing what was done at the house and what was in the quotation. He testified that a meeting was held on 17 August 2017 with the defendant and first housing capital and he was not given a chance to explain how he arrived at 26% and they were ordered to vacate the site. Mr. Kweendo testified that he was the MD of the plaintiff, he confirmed that the construction could not start on the date as stated because of the problems with the building plan.

[28]      He further denied that they employed unskilled workers and that the work done was of poor quality. He testified that the project could have been completed on time (18 October 2017) had the defendant not terminated the agreement on 15 August 2017.The termination was not by mutual consent as per the SLA.

 

Discussion

[29]      The defendant testified that he was unhappy with the slow progress of the project and he informed first capital housing fund about the state of affairs at the project first capital housing evaluated the work done at 15% of the quotation amount. Defendant also testified that he was instructed by first capital housing to draft a termination letter and that he did and forwarded that to the plaintiff. First capital housing was not party to the SLA and they had no right to instruct the defendant to draft a termination letter and to terminate the SLA. It was a one sided termination by the defendant on the instruction of first capital housing and therefore the termination of the SLA by the defendant before the expiry date was unlawful. Mr. Kweendo and Witbooi testified that work which remained before the SLA was terminated could have been completed before the expiry date of the SLA. Mr. Witbooi testified that the work done by plaintiff by the time the SLA was terminated was 26% of the quotation and the plaintiff was only paid 15% thereof and accordingly the plaintiff is owed the difference which is the amount claimed in claim1. As far as claim 2 is concerned, Mr. Lameck Kweendo testified that the plaintiff was entitled to 20% of the total project costs as profit that would have been realized had the SLA not been terminated prematurely by the defendant. The total project costs was N$ 588 915.67 and 20% thereof would be N$ 117783 and that is the profit margin they put on their contract when they tender for projects.

[30]      I have found that the SLA was unlawfully terminated by the defendant and accordingly the plaintiff is entitled to damages it suffered as a result of the unlawful termination of the SLA. In Erf 1026 Tygerberg CC [7] the court held that:

The usual purpose of an award of damages for breach of contract is that the sufferer by such a breach should be placed in the position he or she would have been had the contract been performed, insofar as that can be done by the payment of money, and without hardship to the defaulting party (Victoria Fall & Transvaal Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22). In principle, a party aggrieved by a breach of contract is entitled to claim as damages his bargain in the sense of what he would have gained if the contract had been properly performed, as well as his loss in the sense of the expenditure he would not have incurred if the contract had not been entered into. An aggrieved party can thus claim damages for the profit he or she would have received had the contract been honored (his expectation interest, or positive interesse) and for out-of-pocket expenses (his restitution and reliance interests, or negative interesse) (My emphasis) The learned author Christie[8] opines that:

“The principle that damages must be proved is sometimes stated as if it were a strict rule, but in Bowman v Stanford 1950 2 SA 210 (D) 222-223 Selke J said of such statements:

“But to make such dicta into inflexible rules applicable in every instance without regard to the circumstances of the parties in respect of the availability of the evidence, or to the precise nature of the claim, or the particular injury or loss claimed for, would, it seems to me, result not infrequently in injustice. There must be many types of claim due to breaches of contract which do not admit, for various reasons, of strict or detailed proof in terms of so much money. For example, loss of business, especially in relation to the future, cf. Bower b Sparks, Young and Farmers’ Meat Industries Ltd 1936 NPD 1, at p 23.”(My emphasis)

[31]      Based on the authorities cited above, I am satisfied that the plaintiff proved on balance of probabilities that it is entitled to the claim amounts.

[32]      Order

Ad claim 1

1.         Judgment in the amount of N$70 546.18 is granted in favour of the plaintiff.

Ad claim 2

2.         Judgment in the amount of N$ 117 783 is granted in favour of the plaintiff.

Ad both claims

3.         Interest on the said amounts tempore morae.

4.         Costs of one instructed counsel.

 

______________________

G N NDAUENDAPO

Judge

 

APPEARANCES

FOR THE PLAINTIFF:        Ms. C Kavitjene

Of Tjombe–Elago Inc.

Windhoek

 

FOR THE DEFENDANT:     Mr. S Enkali

Of Kadhila-Amoomo Legal Practitioners

Windhoek

 

 


[1] 2009(1) NR 196 (SC) para 36.

[2] 2012(1) NR 5[HC] at p14.

[3] 1996(2) SA537(C)[1996]1 All SA509 at542 E-F.

[4] I 1852/2007 [2015] NAHCMD 57(16 March 2015) at 3.

[5] 1914 AD 532 at 543.

[6] 1975(3) SA 16 (A) at 26B-C.

[7] Erf 1026 Tygerberg CC v Pick ‘N Pay Retailers 2005(6)527 p531 para 10.

[8] Christie, The law of contract in South Africa 6ed p 570.

Download